February’s $222.5b budget deficit was largest ever in nation’s history
WASHINGTON — Last month the government ran the largest-ever budget deficit for a single month. The shortfall kept this year’s annual deficit on pace to end as the biggest in US history.
The widening deficit reflects the impact of the tax-cut package President Obama and congressional Republicans brokered in December.
As a result, the nonpartisan Congressional Budget Office in January raised its estimate for the annual deficit from $1.1 trillion to $1.5 trillion. It said the tax cuts would add $400 billion to this year’s gap. The budget year ends Sept. 30.
The tax-cut package extended income tax cuts, reduced workers’ Social Security taxes, extended unemployment benefits, and accelerated business tax write-offs, among other steps.
February’s deficit of $222.5 billion eclipsed last February’s previous record by nearly $2 billion. The full-year deficit would exceed 2009’s record deficit of $1.41 trillion. And it would mark the third straight year of $1-trillion-plus deficits.
It’s unusual for an economy to be running record-high deficits this far into a recovery. The recession that began in December 2007 ended in June 2009. The problem was that the financial crisis and the recession that followed fueled explosive deficit growth. The government collected less tax revenue after millions of people lost their jobs. And it spent more than $1 trillion to bail out the financial industry and stimulate the economy.
Republicans are now pushing for more than $60 billion in spending cuts this year to help shrink the deficit. Obama and congressional Democrats support some cuts. But they object to the scope of the GOP cuts. They argue that the Republican cuts would unfairly hurt education, college aid, and support for low-income groups.
Even if Republicans achieved their goal in spending reductions this year, the 2011 deficit would still be on track to hit a record. Through the first five months of this budget year, government revenue totaled $869 billion. That was up 8.6 percent from the same period a year ago. Government spending totaled $1.51 trillion, a 4 percent increase.
One of the sharpest increases in federal spending has been interest payments on the debt: $94.5 billion so far this budget year. That’s up 9.3 percent from the same period a year ago.